Gold soars to new record heights; silver up another 2.5%, nears $27

Gold soars to new record heights; silver up another 2.5%, nears $27 by Michael J Kosares for USA Gold

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Gold soared to new record heights in overnight trading with the bulk of the impetus originating in Asia. It is up $21 at $2042 without so much as a pause at the $2000 benchmark.  Silver is tracking higher at an even stronger pace – up another 2.5% (+83¢) at $26.96. Watching the rapid rise of both gold and silver these past few days, we could not help but recall a recent DMR in which we quoted fund manager Diego Parilla.

“What you’re going to see in the next decade,” he said, “is this desperate effort, which is already very obvious, where banks and government just print money and borrow, and bail everyone out, whatever it takes, just to prevent the entire system from collapsing…What we’ve seen over the last decade is the transformation from risk-free interest to interest-free risk, and what this has created is a global series of parallel synchronous bubbles…One of the key bubbles is fiat currency, and one clear anti-bubble in this system is gold.” He went on to say that gold could go as high as $3000 to $5000 over the next three to five years. That projection no longer seems as extreme as it did a couple of weeks ago.

[See Bloomberg profile:  Doomsday hedge fund sees gold topping $3000 per ounce, 7/15/2020)

Chart of the Day

overlay line chart showing gold versus the US dollar 2019 to presentSources:  ICE Benchmark Administration (IBA), Federal Reserve Board of Governors, St. Louis Federal Reserve [FRED]

Chart note: “A steady decline in the dollar has accelerated in recent weeks,” reports Reuters recently, “as a resurgent coronavirus outbreak in the United States and improving economic prospects abroad sour investors on the currency.” Gold and the dollar tracked higher together during 2019 the beneficiaries of safe-haven asset demand. Now they’ve separated as inflation concerns grow and aggressive Federal Reserve stimulus policies take effect.

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